Gold leaps to 20-day high on USD sell-off
|The ounce troy of the precious metal ran through fresh bids in the NA session and gained more than $7 in a matter of minutes, pushing the XAU/USD pair to its highest level since June 30 at $1247.30. As of writing, the pair is trading at $1246, up 0.4% on the day.
The pair's upsurge was fueled by a broad-based USD sell-off that was triggered by a Bloomberg report that suggested Special Counsel Robert Mueller, who is in charge of the investigation of ties between the Donald Trump campaign and Russia in last year’s election, was expanding the probe to include US President Donald Trump's and some of his associates' business transactions. Following the report, the US Dollar Index slumped to its lowest level in 13 months at 93.89 and was last seen at 94.03, losing 0.65% on the day.
Furthermore, the risk appetite seems to have lost its effect on the markets, ramping up the demand for safe havens such as the precious metal. After setting intraday record highs during the opening hours of the session, major equity indexes in the U.S. reversed course with the Dow Jones Industrial Average and S&P 500 indexes both losing around 0.2%.
With a relatively light economic docket on Friday, market sentiment and the DXY's fluctuations could continue to drive the pair's price action.
Technical outlook
With today's rise, the RSI indicator on the daily graph for the pair started to move towards the 70 mark, suggesting that the bullish momentum is building up. The initial resistance for the pair could be seen at $1250 (50-DMA) ahead of $1259 (Jun. 23 high) and $1266 (Jun. 15 high). On the downside, supports align at $1230 (20-DMA), $1226 (200-DMA) and $1215 (Jul. 14 low).
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